Apple Inc. has taken a major hit as a federal jury in Texas has ordered the computing giant to pay $532.9 million to patent licensing firm Smartflash LLC, which had alleged that the iTunes software violated three patents held by the company (from Reuters).
The jury ruled that Apple had not only violated Smartflash's patents but had done so willingly. The Cupertino company stated that it would appeal the decision, arguing that the patent system needed to be adjusted to prevent litigation from companies that don't make products. Apple has previously been ordered to pay $368 million to VirnetX Inc. for similar charges, however the company successfully had the charges reversed. Smartflash isn't in the clear yet.
"We refused to pay off this company for the ideas our employees spent years innovating and unfortunately we have been left with no choice but to take this fight up through the court system," read a statement released by Apple following the ruling.
The allegations brought by Smartflash go back to 2000, when Patrick Racz—the inventor of the aforementioned patents, now owned by Smartflash—presented his ideas to Gemalto SA, a European company that produced SIM cards for mobile phones. Augustin Farrugia, who is now a senior director for Apple, was present at those sessions apparently.
Apple had previously attempted to have the lawsuit thrown out, alleging that the technology was too simple to justify a patent. A U.S. district judge disagreed. Smartflash was initially seeking more than $850 million in damages, however the jury dropped the total owed to "only" $530 million.
Apple isn't the only company on Smartflash's radar either. Samsung Electronics, HTC and Google have also been served with patent infringement lawsuits for similar technology.
Smartflash was smart in choosing a location for its headquarters: Tyler, TX, the go-to location for patent litigation. Apple's aforementioned lawsuit also played out in Texas.
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